BellSouth Corp., the No. 3 U.S. regional phone company, Thursday said first-quarter profit including its Cingular Wireless joint venture rose 20 percent, boosted by cellphone and high-speed Internet services.
BellSouth agreed to be bought by AT&T Inc. last month to bring Cingular under one roof. It said it now expects the AT&T deal to close by the end of this year, earlier than its previously expected close in the first quarter of 2007.
BellSouth profit, including its 40 percent share of Cingular, rose to $983 million, or 54 cents a share, for the quarter from $818 million, or 45 cents a share a year earlier.
Operating revenue, which includes its stake in Cingular, rose 4.5 percent to $8.68 billion.
Analysts on average had forecast earnings per share of 53 cents on revenue of $8.64 billion, according to Reuters Estimates. Both estimates included Cingular’s results.
Net profit excluding Cingular’s results fell to 43 cents a share from 58 cents a share a year earlier, mainly due to a hefty gain in the 2005 quarter from the sale of its Latin American operations, BellSouth said.
Shares in BellSouth traded a little lower on Thursday even though earnings came in slightly ahead of Wall Street forecasts. Analysts said the movement was tied to a 0.7 percent decline in AT&T shares, which BellSouth has been tracking since the deal was announced in early March.
“I don’t think anything was going to drive BellSouth stock now that the AT&T deal is out there,” Stifel Nicolaus analyst Chris King, who said the results mostly met his expectations.
Phone line losses slow
BellSouth was the first of the U.S. regional phone companies to report this quarter. AT&T and Verizon Communications Inc. are to report in coming weeks.
U.S. telephone companies now depend more on wireless and broadband for growth amid declines in their traditional home phone business.
Stifel Nicolaus analyst King said that BellSouth’s growth in high-speed Internet services beat his forecast.
David Barden of Bank of America said in a note to clients that BellSouth has also shown a slower than expected decline of traditional telephone lines, which could signal “a positive sign of overall steadiness in the business.”
BellSouth’ reported line losses of 213,000, well below Barden’s estimate for 329,000. The company added 263,000 new high-speed Internet customers in the quarter, bringing its total number of broadband customers to 3.1 million.
King said he had expected 245,000 new broadband customers.
Cingular on Wednesday reported 1.7 million new subscribers during the quarter, well ahead of analysts’ estimates.
BellSouth shares traded 9 cents lower at $32.92. The stock is up by nearly 33 percent since investors began betting on an AT&T purchase about six months ago.